The Japan Times - Japanese tech stocks hit by AI fears, dollar boosted by tariff talk

Tokyo-listed companies linked to the artificial intelligence sector tanked for a second straight day as investors tracked a rout on Wall Street that saw Nvidia crumble 17 percent, wiping more than half-a-trillion dollars off its market capitalisation.

The retreat came after DeepSeek unveiled its R1 chatbot that has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies.

Nvidia has been the standout company that has led the drive by investors to seek out all things AI, spending vast sums of cash but seeing their share prices rocket -- the US chip firm has piled on about 1,900 percent in five years.

The DeepSeek bombshell also came on the heels of President Donald Trump's announcement of a new $500 billion venture to build infrastructure for artificial intelligence in the United States.

Trump said the release "should be a wake-up call for our industries that we need to be laser-focused on competing to win".

He argued that it could be a "positive" for US tech giants.

"Instead of spending billions and billions, you'll spend less, and you'll come up with hopefully the same solution," he said.

The Nasdaq tanked more than three percent and the S&P 500 more than one percent, with another US chip-maker, Broadcom, off 17.4 percent.

Art Hogan, chief market strategist at B. Riley Wealth, described Monday's selling as "shoot first, ask questions later", noting that some are sceptical about DeepSeek's assertions.

Still, the selling in Tokyo extended into Tuesday. Advantest plunged more than nine percent, while Tokyo Electron and Disco Corporation shed more than three percent.

Tech investor SoftBank, which is a key investor in Trump's AI project, tumbled more than five percent, having lost more than eight percent the day before.

- Greenback rally -

"The Deepseek news has triggered a rethink on the AI revolution and arguably one of the pillars of the current US exceptionalism," said National Australia Bank's Rodrigo Catril.

"If R1 is as good as first impressions seem to suggest, then demand for sophisticated chips, infrastructure (think data centres) and energy may not be as large as originally thought."

However, most other Asian markets rose in limited trade ahead of the Lunar New Year break.

Hong Kong, Sydney, Singapore and Manila were up, though Wellington dipped.

Shanghai, Jakarta, Seoul and Taipei were closed.

The dollar pushed higher after the Financial Times reported that US Treasury Secretary Scott Bessent was looking to impose universal tariffs of 2.5 percent on goods initially and lifting them by the same amount each month.

It said the move would give room for negotiations with the White House but the tariffs could go as high as 20 percent.

The report comes after Trump rattled confidence Sunday by a row with Colombia over deportations, in which the president said he would hit the country with 25 percent levies.

Bogota backed down after a short standoff, but analysts said the development highlighted the president's willingness to wield tariffs.

The greenback rallied against the yen, euro and sterling, while the Mexican peso and South African rand were off more than one percent each.

Investors are also looking ahead to the Federal Reserve's policy meeting this week, with hopes it will offer a fresh view of its interest rate outlook in light of Trump's tariff warnings and pledges to slash taxes, immigration and regulations.

"Data points to better inflation, continued growth but the first executive orders from the president targeting immigration could see the jobs market tighten and force up wages," TipRanks analyst Neil Wilson said.

"On tariffs, things are only just getting started. Donald Trump said he would 'rather not' impose new tariffs on China. But it's hard to see things going any other way," said Wilson.

"The reality of tariffs has not been fully priced."

- Key figures around 0230 GMT -

Tokyo - DOWN 0.6 percent at 39,340.15

Hong Kong - Hang Seng Index: UP 0.1 percent at 20,217.75

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.0454 from $1.0492 on Monday

Pound/dollar: DOWN at $1.2462 from $1.2496

Dollar/yen: UP at 155.39 yen from 154.61 yen

Euro/pound: DOWN at 83.88 pence from 83.94 pence

West Texas Intermediate: UP 0.2 percent at $73.34 per barrel

Brent North Sea Crude: UP 0.2 percent at $77.24 per barrel

New York - Dow: UP 0.7 percent at 44,713.58 (close)

London - FTSE 100: FLAT at 8,503.71 (close)

T.Sasaki--JT